Central Canada Foods Corporation

September 26, 2005 12:07 ET

Central Canada Foods Finalizes Terms of Related Party Transaction

MISSISSAUGA, ONTARIO--(CCNMatthews - Sept. 26, 2005) - Central Canada Foods Corporation (TSX VENTURE:CDF.A) has agreed to lease terms for its Timberlea plant from 1469818 Ontario Inc., a company controlled by George Michaels, Central's president and majority shareholder in a related party transaction. The agreement was finalized on September 22, 2005.

Central Canada will be the sole tenant and lease the plant for a ten-year period beginning October 18, 2004 at an annual rental cost of $270,000. Central Canada also has an option to acquire the plant at cost for the duration of the lease.

Prior to the purchase of the plant by 1469818 Ontario Inc. in October 2004, Central Canada had assigned the right to purchase the plant for $1,775,000 to 1469818 Ontario Inc. because the purchase of the plant with a mortgage of $1.7 million could potentially have put Central Canada at risk of breaching covenants associated with its line of credit.

The independent members of the Board of Directors of the Company have unanimously approved the lease agreement and believe that that Central Canada is exempt from a formal valuation because at the time the transaction was agreed to, neither the fair market value of the property nor the lease, nor the fair market value of the consideration for, the transaction, insofar as it involves related parties, exceeds 25 per cent of Central Canada's market capitalization.

The 23,000 sq. ft. plant is expected to increase production capacity three fold and allow Central to expand its sales to both domestic and export customers.

About Central Canada Foods Corporation

Central Canada Foods Corporation (CCFC) is a federally inspected, HACCP approved, meat processing company. CCFC's products are marketed and sold to Canadian national and regional grocery chains. CCFC also uses international food brokers to sell its products abroad, primarily into the Asian-Pacific market.

The Toronto Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the content of this News Release. This News Release may contain certain forward-looking statements, which statements can be identified by the use of forward-looking terminology such as "may", "will", "expect", "anticipate", "estimate", "predict", "plans", or "continue" or the negative thereof or any other variations thereon or comparable terminology referring to future events or results. Forward looking statements are statements about the future and are inherently uncertain, and the Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of numerous factors, including without limitation, the need for regulatory approval, marketing/manufacturing and partnership/strategic alliance risks, the effect of competition, disease, uncertainty of the size and existence of a market opportunity for the Company's products, as well as a description of other risks and uncertainties affecting the Company and its business, as contained in news releases and filings with the Canadian Securities Regulatory Authorities, any of which could cause actual results to vary materially from current results or the Company's anticipated future results. Forward-looking statements are based on the beliefs, opinions and expectations of the Company's management at the time they are made, and the Company does not assume any obligation to update its forward-looking statement if those beliefs, opinions or expectations, or other circumstances should change.

Contact Information

  • Central Canada Foods Corporation
    George Michaels
    (905) 272-3133